Energy Department awards auto battery grants

The Department of Energy on Wednesday announced which U.S. companies have been awarded grants to build manufacturing plants for electric vehicle batteries.

The $2.4 billion program, established as part of the stimulus plan, sets aside funds for auto battery manufacturing and related components, such as electric motors. (Click here for a PDF to see the full list and for a map of the awards).

President Obama, appearing in Elkhart, Ind., and Vice President Joe Biden, in Detroit, were scheduled to announce the recipients and specific amounts. Energy Secretary Steven Chu is scheduled to speak Wednesday in Charlotte, N.C., and visit a battery supplier.

The grants, which will be matched by $2.4 billion in private investment, will go to battery and component suppliers as well as the big U.S. automakers--General Motors, Ford, and Chrysler--which will receive over $400 million for manufacturing and to test the performance of electric vehicles, such as the Chevy Volt.

In all, there will be 48 funded projects, with many--18 out of the total--located in the traditional auto manufacturing states of Michigan and Indiana.

The grants are meant to jump-start the U.S. industry for auto batteries, which is now dominated by Asian suppliers. The Obama administration has set a goal of putting 1 million plug-in electric vehicles on the road by 2015.

Of the total, $1.5 billion is available for U.S. battery manufacturing and $500 million for related technology, such as electric motors. Another $400 million is dedicated for federal agencies to purchase fleet plug-in electric vehicles and to develop the infrastructure needed for plug-in electric vehicles, such as charging stations and training for technicians in electric vehicles.

The White House said that the companies were chosen in a "highly competitive process" where applications were evaluated by the DOE.

Battery makers
For the individual companies involved, the grants can be a lifeline to bigger things, such as volume production. The credit crisis on Wall Street has made it difficult to secure the significant amount of money needed for constructing new manufacturing facilities, particularly for new battery technology.

The top recipient is Johnson Controls, which will receive $299 million to produce nickel cobalt metal battery cells and packs. A123 Systems will get $249.1 million to go ahead with plans to build a factory in Michigan for its lithium ion battery packs and related components.

Dow Koman is set to receive $161 million for its batteries, and Compact Power, on behalf of Korean company LG Chem, will produce the lithium ion battery cells that will be used with General Motors' Chevy Volt electric car.

Another recipient is EnerDel, which received $118.5 million that it intends to match with the same amount to expand lithium ion battery manufacturing in its home state of Indiana. EnerDel has supply agreements with Fisker Automotive and Think. Saft America will receive $95.5 million to produce lithium ion cells and batteries for industrial, agricultural, and defense vehicles.

EnerDel CEO Charles Gassenheimer said that the grant will allow the company to double the volume at its existing auto battery plant in Indiana. "What this money does is accelerate our business plan tremendously," he said.

The company has also applied for a $480 million loan under the Advanced Technology Vehicles Manufacturing Loan Program, which is expected to be announced in the coming weeks. Without the grant or loan, the company projected revenue of $700 million by 2015, but if it receives both it expects it can get to $2.25 billion.

Having a domestic auto battery supply chain will allow auto battery makers to lower the cost by as much as 40 percent in that time frame, EnerDel projects.

"The U.S. taxpayer can expect the United States, which is playing second seat to Asia and Europe in electric drive trains, (to produce) cheaper, more fuel-efficient cars faster," Gassenheimer said. "We strongly believe that on a total cost of ownership basis, electric cars can be significantly cheaper today than gasoline cars."

Charging stations
Hybrid vehicles now use nickel metal hydride batteries but many new models of electric cars set to come to market over the next two years will use lithium ion batteries, which are already widely used in consumer electronics. Although there are different types, lithium batteries are preferred because they are lighter and allow for higher energy density.

But there were two battery companies--East Penn Manufacturing and Exide Technologies with Axion Power--in the program that received funds to advance lead acid batteries for "micro and mild hybrid applications."

The largest grant for developing a charging infrastructure went to eTec, a subsidiary of Ecotality, and Nissan which will test a network of fast-charging stations in cities in Arizona, California, Oregon, Washington, and Tennessee.

The DOE will invest $99.9 million, which will be matched by participating companies, to test the performance of 5,000 of Nissan's all-electric Leaf sedan with eTec's charging stations, in different climates and use patterns.

The DOE's goal is to have 70 percent of funds spent by the end of September next year and have nearly all the money spent by the following year, Energy Department senior adviser Matt Rogers told reporters on Tuesday, according to Environment & Energy Daily.

A "public-private partnership" is required to speed the transition to new auto technology, said Brian Wynne the president of the Electric Drive Transportation Association industry group. Pumping money into the sector will help auto makers meet demand for electric cars over the next two years and lessen the premium consumers need to pay for the new technology, he said.

"There's the immediate impact of jobs--it's all about green jobs--and we want to invest in a sector that will pull us into a new era. That's what essentially investing in here," said Wynne.

This article was updated at 9 a.m. PDT with more details, and the corrected amount of EnerDel's grant and the number of awards in Michigan and Indiana.